CFTC Fines ED&F Mann for Swaps Disclosures Violations

The US Commodity Futures Trading Commission (CFTC) has fined ED&F Man $3.25 million for a failure to disclose conflicts of interest and mid-market rates to counterparties, as well as data reporting failures.

CFTC says that the firm failed to disclose to counterparties that proprietary traders working for a ED&F Man affiliate had access to the trading books and positions of the main firm’s FX swaps traders, meaning counterparty information would be exposed. The CFTC Order says that from February 2014 to January 2018, seven traders had physical and electronic access to the details of trades, and orders that the ED&F Man customers intended to place.

Also starting in February 2014, until September 2019, CFTC says ED&F Man failed to provide pre-trade, mid-market marks to some counterparties in FX swaps and precious metals. The firm also, from February 2014 to July 2021, failed to accurately report certain swaps data in precious metals and FX swaps for “hundreds of thousands” of swaps, according to CFTC.

The Commission says that in September 2019 In September 2019, ED&F Man implemented remedial measures to correct deficiencies in its swaps data reporting and mid-market disclosure compliance, but adds that while those remedial measures have been largely successful, some compliance deficiencies remained until July and April 2021, respectively.

“The CFTC will not hesitate to bring cases against swap dealers that violate substantive customer protection regulations and fail to have adequate supervisory controls in place,” says CFTC acting director of enforcement Vincent McGonagle. “Swap dealer registrants must ensure they make complete and accurate disclosures to counterparties and accurately report swap valuation data to SDRs, and they must also diligently perform their supervisory duties.”